The SEC has strengthened auditor independence by requiring that management

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The SEC has strengthened auditor independence by requiring that management




Answer: Report the nature of disagreements with former auditors. (The SEC requires that the management of an issuer (public company) report the nature of disagreements with former auditors by filing Form 8-K. Such disclosure inhibits management from changing auditors to gain acceptance of a questionable accounting principle. Also, a potential auditor must inquire of the predecessor auditor before accepting an engagement (AU-C 210). Thus, the inquiry provides an opportunity to confirm the information given in the 8-K report. However, confidential client information may only be communicated with the client's consent.)

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